Use 3PL services for a growing business

More and more businesses are using third-party logistics service providers. Building an in-house supply chain is expensive, slow and a learning process riddled with mistakes. On the other hand, outsourcing the supply chain is efficient, quick and adaptable. The benefits of using 3PL are more than just reduced initial capital outflow or getting expertise. With ever-increasing competition, businesses need to focus more and more on their core activity and reduce or divert resources from non-core activities while extracting the best out of them. Managing supply chain is one such activity that can be efficiently outsourced. In fact outsourcing such non-core activity can be strategically beneficial in the long run for a business. Here are a few advantages that a growing business can get from outsourcing its logistics.

 

Scalability – Building a supply chain requires time and investment. Underutilized supply chain represents locked capital which is bad for a growing business. On the other hand, peak utilization limits the growth that operations can achieve. However, with outsourcing, the supply chain capacity can quickly increased or reduced without much impact on scale. Quick scalability is one of the biggest advantages an outsourced supply chain can offer to a growing business. Third-party providers are geared to scale their operations depending on their client’s requirements. They invest their capital in spare capacity and clients don’t need to make any capital investment. Further, if the scale of operations reduces for a client, the extra capacity is simply sold to another customer with no impact on the first client.

 

Optimization – Logistics is frequently about optimization of the resources such as packaging, transportation, route and delivery time for most efficient use of resources with minimum time. This planning and coordination requires special skills that are expensive and hard to find. Further using the skilled and costly planners only for one business may not be the cost-efficient. 3PLs bring in planning and optimization as their core skill. They plan for most optimal warehouse locations, delivery modes and routes and club cargo from multiple clients to bring the costs down. High priority deliveries are also clubbed together to bring down their costs (as compared to individual high priority delivery). This degree of optimization is difficult to achieve for a small business without significant investment and dedication of resources, which can burn quite a hole in the pocket, as the company grows.

 

Constant innovation – Supply chain requires continuous innovation in terms of packaging, equipment, processes and even transportation vehicles. For example, newer material for pallets keeps making them stronger and lighter, new methods of merchandise scanning makes tracking more efficient, more modern robots make stacking and picking of products much faster and more comfortable. Similarly, new transport vehicles (newer trucks) keep reducing the cost of transportation. The problem is that all such innovation requires an upfront investment and business cannot make any new investment until ROI from the previous investment is realized. But with higher utilization, 3PL have faster ROI cycles and can bring in capital-intensive innovation much quicker. Besides logistics being their core business, 3PLs thrive on constant innovation in supply chain to reduce costs and improve service.

 

Quick movement between supplier – While it is a good idea to maintain long relationships, business realities sometimes require to change the vendors. This need for change could be for many reasons such as better rates, larger scale of operations, wider network spread, or simply a kind of service that is not being offered by current supplier (even today many 3PL suppliers do not offer cold storage chains). As the business grows, the supply chain requirements will also change. The scale of material handling will increase. The variety of products being sold will also increase, and this will need different logistics skills. In house logistics department will need time to change and may even put up resistance to change. Improving the skill set of the whole department is not possible in a matter of few days (or even few weeks). But changing supplier is just a matter of negotiation (apart from identification of-course). The business operations are not vastly disrupted while the change of supplier happens. As is well known, changing or upgrading a department of the business is extremely slow and tiresome process, but changing a vendor is easier.

 

Lowering of Costs – Development of supply chain needs space, warehouses, packing machines, moving and stacking machines and vehicles (as large as up to trucks and lorries) making them capital intensive investments. Also, logistic operations are equally expensive, if not more. Many times, the supply chain capacity is not fully utilized leading to a high wastage of money. The 3PL absorbs the capital investment and can depreciate the equipment much faster owing to its higher utilization. The capital cycle (for supply chain) is much more efficient for 3PL as compared to in-house supply chain investment. There is no doubt that unless the volumes are huge, 3PL makes a lot more sense regarding costs and investment for any business.

Further, as the product moves through regions, various agencies or external companies come in picture. A product moving across the border will interact with customs, excise, clearance house, export regulators. Businesses need working relationships with all of them for its cargo to move quickly and efficiently through these agencies. Developing and maintaining these relationships needs resources which cost money. As business volumes grow, the interactions with agencies also increase and need more resources. A 3PL maintains these relationships for its customers so that the businesses do not have to it themselves, and they do it more efficiently.

 

Developing supply chain is a slow and costly process and often requires changes that are expensive. As the business grows, the inefficiencies of the supply chain start to glare out. The growth phase is precisely the time when companies need an efficient supply chain. An outsourced, third party supply chain will not only eliminate the inefficiencies, but it will also bring in innovation to handle the large volumes of growing business, that may provide the edge, that a growing business needs.

Fulfillment

Benefits of Recruiting an Efficient Fulfillment Partner

When it comes to optimizing an existing supply chain framework, organizations must clearly emphasize on the fulfillment services. Moreover, fulfillment service providers also play a vital role when it comes to handling and improving the shipping logistics. While certain organizations opt for in-house fulfillment services, some prefer outsourcing majority of their work to experienced service providers which can also handle the basics of distribution.

While having a strategically situated fulfillment center comes in handy, fulfillment partners must also look to streamline and simplify the supply chain process. Moreover, an efficient service provider must also aim at improving the customer experience, across multiple channels. In the subsequent sections, we shall look at the topmost traits pertaining to a highly efficient fulfillment service provider while enlisting the most prior ones for improving productivity.

Better Order Management Framework

Organizations must have high expectations from their fulfillment partners and the ability to address order management should be at the top of the pecking order. The e-commerce fulfillment service provider should be able to pair all of its attributes with innovative technologies. That said, efficient order management must cater to multiple channels while being able to handle the nooks and crannies of product demand and order placements.

Inventory Management Capabilities

Every organization needs to be careful about the product inventory, spread across diverse marketing channels. Therefore, an efficient fulfillment partner must offer considerable levels of visibility for tracking real-time and continuous inventory-specific developments. This trait helps companies manage the supply chain in a better way.

Reporting in Real-Time

A functional fulfillment service provider must be able to report about e-commerce whereabouts in real-time. This, in turn, offers an expansive and detailed view of the inventory; thereby helping customers complete orders in a quick and seamless manner. Real-time reporting feature is probably the most underrated aspect of supply chain management and an efficient fulfillment service provider should bring the same to the fore.

 

Hassle-free Fulfillment Completion

A fulfillment service provider should at least be able to complete the tasks associated with fulfillment in a precise and seamless manner. A service provider that can cope up with the promotional sales and seasonal demands can be easily considered as bankable. However, it’s all about pairing services with advanced technologies, in order to achieve fulfillment perfection. Needless to say, an efficient fulfillment partner can improve the visibility of the concerned brand by rendering back-end expertise and other intuitive ideas.

Ability to Fix Warehouses

A fulfillment partner with considerable levels of expertise can help a warehouse with the designing elements. There are times when a non-scalable warehouse starts busting out at the seams courtesy lack of spaces and necessary adjustments. Fulfillment service providers handle the internal affairs by making the warehouses more conducive to work.

Handling Customer Relationships

Customer relationships are important, especially when e-commerce services are concerned. Fulfillment partners allow company owners to track the buyer journeys; therefore allowing them enough time and resources to personalize the service sets. This minimizes the number of complaints and helps improve productivity, almost immediately.

Can we do without Outsourcing Fulfillment Services?

Every fulfillment-specific requirement is usually handled by the 3PL service providers, as a part of an expansive package. However, small businesses usually do not have the financial backbone to invest in a third-party service provider and they usually resort to in-house options for addressing the requirements. If an unbiased consideration is taken into account, a fulfillment service provider with the above mentioned traits is necessary as the absence of the same can cause the sales volume to fluctuate and that too, regularly. Apart from that, companies without innovative fulfillment technologies are bound to experience order errors. In addition to that, an efficient fulfillment partner also eliminates the shipping, processing and product-specific errors.

Companies without reliable 3PL services also lack scalability i.e. the ability to adapt and innovate according to the market sentiments. An efficient fulfillment partner renders scalability to the organizations by streamlining the processes related to packaging, inventory control and shipping.

10 Myths About E-commerce Fulfilment Solutions

The high paced growth of the E-commerce sales channel has given immense boost to the E-commerce Fulfillment Solutions and various Third Party Logistics companies. However, there exists a wide section of the market – especially the smaller, newer e-commerce players who debate the concepts of outsourcing their Fulfillment operations or for that matter, even consider a professional Fulfillment solution. So here’s an attempt to break certain myths about the whole order Fulfillment solution and put things into perspective.

  1. Getting orders is tough; Order Fulfillment is easy.

Right and wrong. While the base of any business is getting more and more orders for your products, it is equally important to have a seamless, cost effective and fully optimized order Fulfillment process in place to ensure repeat customers, better revenues and even better profits. Many small and new businesses believe that having a good product to sell is a war won. However, what they miss is that order Fulfillment is a giant that will slowly grow so big that it would be tedious and not profitable to do it all by themselves.

  1. Fulfillment solutions are only for the BIGGIES.

A BIG Myth. Fulfillment solutions can benefit businesses of any scale. The key is to tap on the right Fulfillment partner for your business’s need. A bit of research and having clarity of what you need from your Fulfillment partner can be far more beneficial and economical than doing it all by yourself.

  1. Fulfillment Solutions Are Expensive.

At the first look of it – Yes they are! But have a closer detailed look and you would know that it’s an investment that saves you a lot more expense at a later point…maybe even today. If you are an ecommerce merchant handling your own order Fulfillment, you know how high your fixed costs have gone. You can cut them down by outsourcing your order Fulfillment to a specialized Fulfillment solution provider. Imagine not having to bear the cost of that warehouse?

  1. Order Fulfillment solutions are only friends of ‘volumes’.

No doubt, volumes ensure better profits but Fulfillment solutions are profitable to all. Smaller businesses often go through fluctuations in their sale volumes. Festivals and special occasions can sometimes give a huge spike which can become highly difficult to manage in terms of product deliveries. Having a Fulfillment partner ensures that you receive the scale up and down of order Fulfillment resources without having to either increase your fixed costs or lose market credibility with poor deliveries.

  1. We’re too small to have complex systems and processes

Small e commerce ventures believe that having Fulfillment solutions may end up complicating their otherwise simple delivery process. On the contrary, if you wish to grow and scale up your business in future, it is far more important to have your processes put right at an early stage. Looking in to detailing at the start and letting Fulfillment experts set up your base can actually save you lot of time, money and effort of revamping at a later stage.

  1. We know them best- Our Business, Our Customers

Most retailers are driven by the thought that they know their business and their customers well and no third party can match up to the standards of reaching out to their customer. Remember, just like you, the 3PL or Fulfillment solution providers are experts of their business and your delivery services may actually not match up to their efficiency and standards. Let the experts do the job!

  1. We’ll lose sight and control.

Business owners worry that having their warehouse stocking, logistics and shipping out of their main system may lead to losing sight of their product and control on their deliveries. However, the truth is that modern Fulfillment solutions give better control and visibility to business owners. With providers offering real time tracking, order Fulfillment can be a cake walk.

  1. It’s Only Packing and Shipping! What Extra would They Do?

Most small to mid-size companies are not fully aware of the offerings of modern day 3PL’s and thus fail to see the benefit. Order Fulfillment companies are way beyond a pick, pack, ship player. Their extensive value added services can really help your business grow.

  1. They may stunt our growth

For the ambitious ones, being stuck with a Fulfillment partner is a scary thought. The truth, however, is having selected a ‘fit to your needs’ Fulfillment partner and having a great working rapport can in reality help you scale faster than you could do yourself.  Your partner scales up as your business grows.

  1. What if my inventory is slow moving? It’ll be far more expensive.

Yes, it’s a fact that there may be chances of you paying much extra on storage for slow moving inventory. However, collaborating with a good Fulfillment partner who gives you a good picture of your stock and stats, can help you avoid the scenario of SMI in the first place. Additionally, Fulfillment solution providers offer value added services like promotions in order delivery which can help the slow inventory pick pace.